Sony Predicts further Games Division Losses

The current quarter is expected to bring significant losses for Sony, which could have a major impact on the company and its numerous divisions and could also affect the launch costs for its next-generation console.

Sony posted a profit of 32.3 billion Yen (219 million Euro) for the second quarter of this year, which is largely attributed to growth in flat TV sales and a general rise in profitability for its consumer electronics and movie divisions.

However, according to Takao Yuhara, Sony's senior vice president, the consequences of a possible increase in valuation loss for the microchips used in the PS3 should not be taken lightly.

"We might see valuation losses of a size that we cannot laugh away in the quarter," Yuhara stated.

The games division saw a 30 percent drop in revenues and a massive operating loss as a result of the PS3 development, and the November launch looks set to drag the company further into the red. But although analysts remain skeptical of the console's potential success, Yuhara remains confident and estimates that the company can recover losses within a five year period.

If sales of the PS3 meet or exceed expectations Blu-ray could become the dominant optical format on the market, and the entire Sony group will benefit, especially the company's huge movies division. Failure on the other hand could deal a severe blow to the organization's financial stability. High stake gambling indeed.